In this article, we discuss 10 best MLP dividend stocks to buy. If you want to skip our discussion on MLP income investing, go directly to 5 Best MLP Dividend Stocks To Buy.
A master limited partnership (MLP) is a type of business enterprise that enjoys the tax concessions of a private partnership and the liquidity benefits of a publicly traded company. General partners of MLPs actively manage the companies and oversee operations, whereas shareholders are the limited partners of these entities.
MLPs are often found in the energy sector, such as oil and gas storage, pipeline transportation, and energy infrastructure companies. These businesses offer high yields to shareholders, which makes them attractive investments, especially during the current inflationary environment where dividends are an effective hedge.
With Brent crude oil prices hitting a 13-year high and crossing $130 per barrel amid Western sanctions on Russian energy, the demand for American oil and gas companies has exorbitantly increased, as well as their pricing power.
MLPs are tax-advantaged securities, which is why retail investors, retirees, and institutional investors alike gravitate towards them. In the booming oil market, where Occidental Petroleum Corporation (NYSE:OXY), Exxon Mobil Corporation (NYSE:XOM), and Shell plc (NYSE:SHEL) are in focus, attention is shifting to master limited partnerships for their attractive dividends, which are supported by the favorable market.
Our Methodology
After a careful assessment of the energy MLP universe, we picked stocks with high yields, growth prospects, and positive analyst ratings. Data from the exclusive group of 900+ elite hedge funds tracked by Insider Monkey that filed 13Fs for the Q4 2021 reporting period was used to gauge the hedge fund sentiment around the stocks.
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Best MLP Dividend Stocks To Buy
10. USD Partners LP (NYSE:USDP)
Number of Hedge Fund Holders: 1
Dividend Yield as of March 15: 8.90%
USD Partners LP (NYSE:USDP) is a Texas-based company that develops and manages midstream energy infrastructure assets. The company is also a provider of transportation for energy-related products like crude oil and biofuels, operating across the United States and Canada.
On January 26, USD Partners LP (NYSE:USDP) announced a per share quarterly dividend of $0.121, a 2.1% increase from its prior dividend of $0.118. The dividend was distributed on February 18, for shareholders of record on February 9. USD Partners LP (NYSE:USDP)’s dividend yield came in at 8.90% on March 15.
Although USD Partners LP (NYSE:USDP) is a relatively small company, given the market cap barely exceeds $150 million, it is a smart play given upcoming growth catalysts. On January 18, the company announced its five-year contract with a key ethanol producer, which will increase incremental net cash by roughly $1 million and adjusted EBITDA by $1.5 million on an annual basis. USD Partners LP (NYSE:USDP) is also involved in renewable diesel operations through this contract, which could result in gains as the industry shifts to renewable energy given the Russia-Ukraine war and resultant oil crisis.
According to the fourth quarter database of Insider Monkey, Arrowstreet Capital owns 15,307 shares of USD Partners LP (NYSE:USDP), worth $81,000.
In addition to Occidental Petroleum Corporation (NYSE:OXY), Exxon Mobil Corporation (NYSE:XOM), and Shell plc (NYSE:SHEL), USD Partners LP (NYSE:USDP) is a notable income stock from the energy sector.
9. Crestwood Equity Partners LP (NYSE:CEQP)
Number of Hedge Fund Holders: 3
Dividend Yield as of March 15: 8.59%
Crestwood Equity Partners LP (NYSE:CEQP) operates in the energy midstream sector in the United States, supplying natural gas and crude oil, as well as energy-related services to producers in the Williston Basin and Powder River Basin.
On February 22, Crestwood Equity Partners LP (NYSE:CEQP) announced its fourth quarter earnings in a company press release, reporting a Q4 GAAP EPS of $0.79, above consensus by $0.48. Revenue over the period jumped almost 111% year-over-year, reaching $1.38 billion, outperforming market predictions by $190 million. Crestwood Equity Partners LP (NYSE:CEQP) expects the net income for 2022 to fall between $200 million to $260 million.
Crestwood Equity Partners LP (NYSE:CEQP) declared on January 21 a $0.625 per share quarterly dividend, which was paid on February 14, to shareholders of the company as of February 7. The stock yielded 8.59% on March 15, and remains a top MLP dividend pick.
JPMorgan analyst Dan Walk upgraded Crestwood Equity Partners LP (NYSE:CEQP) to Overweight from Neutral on February 28, lifting the price target from $32 to $34. The analyst noted that Crestwood Equity Partners LP (NYSE:CEQP) gained scale after it acquired Oasis Midstream, and new opportunities were offered to the company as a result of this acquisition. He also told investors that Crestwood Equity Partners LP (NYSE:CEQP)’s valuation is attractive at current levels.
Of the hedge funds that were bullish on Crestwood Equity Partners LP (NYSE:CEQP) at the end of December 2021, Springbok Capital held a significant stake in the company, with 425,014 shares worth $4.18 million.
8. Sunoco LP (NYSE:SUN)
Number of Hedge Fund Holders: 3
Dividend Yield as of March 15: 8.22%
Headquartered in Dallas, Texas, Sunoco LP (NYSE:SUN) is a motor fuel distribution company. The master limited partnership is controlled and managed by Energy Transfer Partners, a Texas-based company engaged in pipeline transport for natural gas and propane.
On February 16, Sunoco LP (NYSE:SUN) traded higher in pre-market after its Q4 earnings topped Street consensus, and revenues gained 94% as compared to the prior-year quarter, reaching $4.95 billion. The guidance for 2022 suggests a full-year adjusted EBITDA ranging from $770 million to $810 million and growth capital spending of at least $150 million.
Sunoco LP (NYSE:SUN) declared a $0.8255 per share quarterly dividend on February 4, in line with previous. The dividend was distributed to shareholders on February 18. The dividend yield stood at 8.22% as of March 15.
Citi analyst Timm Schneider upgraded Sunoco LP (NYSE:SUN) to Buy from Neutral with an unchanged price target of $49. The analyst cited the company’s “incrementally positive” Q4 earnings release for the upgrade, and he sees “solid underlying fundamentals” for the stock.
Ken Griffin’s Citadel Investment Group is the leading shareholder of Sunoco LP (NYSE:SUN), elevating its stake by 39% in Q4 2021. Ken Griffin’s fund owns 98,742 shares of the company, worth more than $4 million. Overall, 3 hedge funds were long Sunoco LP (NYSE:SUN) at the end of December 2021.
7. Dorchester Minerals, L.P. (NASDAQ:DMLP)
Number of Hedge Fund Holders: 4
Dividend Yield as of March 15: 8.40%
Dorchester Minerals, L.P. (NASDAQ:DMLP) is a Texas-based limited partnership with royalty, leasehold, and net profit interests across natural gas and crude oil properties in the United States. The company delivers a dividend yield of 8.40% as of March 15.
On January 21, Dorchester Minerals, L.P. (NASDAQ:DMLP) declared a $0.639 per share quarterly dividend, a 26% increase from its earlier dividend of $0.507. The dividend was paid on February 10, to shareholders of record on January 31.
Dorchester Minerals, L.P. (NASDAQ:DMLP) reported on March 2 that it has agreed to a non-taxable contribution and exchange deal with multiple third parties to access mineral and royalty interests of about 3,600 acres situated in counties across Colorado, Louisiana, Ohio, Oklahoma, Pennsylvania, West Virginia, and Wyoming. The agreement will close on March 31, in exchange for 570,000 common limited partnership units of Dorchester Minerals, L.P. (NASDAQ:DMLP).
According to the fourth quarter database of Insider Monkey, 4 hedge funds were bullish on Dorchester Minerals, L.P. (NASDAQ:DMLP), with collective stakes of $35.7 million. Horizon Asset Management is the largest shareholder of the company, with more than 1 million shares worth close to $21 million.
6. Suburban Propane Partners, L.P. (NYSE:SPH)
Number of Hedge Fund Holders: 4
Dividend Yield as of March 15: 8.63%
Based in Whippany, New Jersey, Suburban Propane Partners, L.P. (NYSE:SPH) is a distributor of propane, fuel oil, and refined fuels. The company also supplies natural gas and electricity to residential and commercial customers in New York and Pennsylvania.
On March 10, Suburban Propane Partners, L.P. (NYSE:SPH) announced that it will purchase a 25% equity stake in Independence Hydrogen, a private supplier of gaseous hydrogen for material handling and backup power applications. This acquisition will be valued at $30 million, and is a step towards Suburban Propane Partners, L.P. (NYSE:SPH)’s long-time ambition of branching out into the renewable energy sector.
Suburban Propane Partners, L.P. (NYSE:SPH) on January 20 declared a $0.325 per share quarterly dividend, which was distributed to shareholders on February 8. The stock yields 8.63% as of March 15.
According to the fourth quarter database of elite funds maintained by Insider Monkey, 4 funds held long positions in Suburban Propane Partners, L.P. (NYSE:SPH), compared to 3 funds in the prior quarter. The total stakes held in Q4 exceeded $9 million. Levin Capital Strategies held a prominent position in the company, with 222,803 shares worth $3.2 million.
Elite funds are steadily pouring into Suburban Propane Partners, L.P. (NYSE:SPH), in addition to Occidental Petroleum Corporation (NYSE:OXY), Exxon Mobil Corporation (NYSE:XOM), and Shell plc (NYSE:SHEL).
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Disclosure: None. 10 Best MLP Dividend Stocks To Buy is originally published on Insider Monkey.
